The Money Files

For every £1 spent on change management on large projects, organisations get a return of £6.50.  

That’s the headline research from a new study by Changefirst, a company that helps organisations implement change more effectively.  You would expect a change management company to advocate change management, but their study shows massive returns on doing change management properly.

The project started as a discussion on LinkedIn and over time developed into a short survey.  Financial outcomes and ROI are difficult to establish, so survey respondents were asked to look at projects 6 to 9 months after completion to see whether the change had ‘stuck’.  

"Delivering successful change projects is a key strategic issue for organisations and it has a significant impact on the bottom line,” says David Miller, Managing Director at Changefirst. “Our research shows that on large projects over 40% of change managers believe that at least a third of the financial gains could be attributable to change management activities alone.

In my opinion, only the large projects have dedicated change managers.  Otherwise project managers are left to do the change management activities too.  The research still stacks up for small projects: on these every £1 spent on change management generates a return of £2, which is still pretty impressive, especially when you think that dedicated change management budgets are just a small part of what it costs to deliver a project.

Over 77% of the 2,500 respondents reported that the proportion of implementation budgets spent on change management activities was less than 10%. “This is a little under the norm,” says Miller. “The proportion of spend on change management is usually about 15% for the larger £1 million plus implementations. It may reflect the economy and type of projects. But it may also indicate that organisations don’t have to spend huge amounts on change management to get a very attractive return.”

How do you know if the return on investment is purely down to change management activities?  The Changefirst survey looked at that too.  On projects that cost over £1m, the savings generated were about £2.5m after 9 months.  Personally, this seems as if companies are choosing exactly the right projects to work on, if they are getting benefits generated so quickly at such impressive rates.  Over 40% of respondents managing large projects, believe that more than 30% of these results could be attributed to change management activities. Essentially that means that for projects costing over £1m, change management  is responsible for over £800,000 worth of value in the first nine months.  For smaller projects the numbers drop, but they are still impressive.

I’m pleased that the study shows that change management is a good thing, and that as well as helping the outcome of projects to stick, it also contributes to financial return.  But I can’t help feeling slightly sceptical about the survey results.  I don’t doubt that Changefirst is reporting exactly what people answered – they have been very transparent and you can read the whole report here) – but the picture seems overly rosy to me.  Either I’m a cynic, or companies really are getting the hang of portfolio management, and in the middle of the economic downturn, really were working on projects that delivered massive benefits over the short term. Good for them.  What do you think?  Is this the experience you’ve had in your company?
 

APM Group have launched their earned value qualification.  Apparently, there is enough of a market demand for the exam.  In the current economic climate, earned value is under the spotlight and APMG believe that this qualification will help.  Sponsors will be able to identify if the project is delivering the value expected and track budget and financial measures.  Project managers also gain by being able to measure and monitor more effectively, ensuring the project delivers the best possible value for the company.

Earned value as a technique has some benefits.  It helps ensure that people are aware of what has been spent, deliverables to date, outstanding work, final cost forecasts and expected completion dates.  But you don’t need a qualification to do that.

Still, having completed a course and taken an exam would provide the confidence you needed to use EVM on your projects. EVM follows the same pattern as the other exams from APMG, with a Foundation and Practitioner level, although only Foundation is available at the moment.  As with the other Foundation papers, this exam consists of 40 multiple choice questions.  You get an hour to complete the exam and it’s closed book, so you need to have a good memory!  The pass rate is 65%, which is broadly in line with the other Foundation papers.

It looks as if the EVM qualification is shaping up to be a full 5 day course, a lot like PRINCE2.  Foundation is currently a two day course, like the PRINCE2 Foundation, which makes me think that when Practitioner is available next year, it will fill the rest of the week.  The current EVM Foundation course covers:

• Definition
• Planning
• Data collection
• Analysis and review
• Change and risk management
• System review

You can read more about the EVM qualification on the APMG’s website.



Practitioner level is going to be available early next year.
 

Our study for did not specifically ask about project management, but Planning/Prioritization would be a logical strength required, since that would allow a person to very naturally sequence items within a complex project.

Great, thanks, Chuck!

I gave away a copy of Chuck's book, Work Your Strengths at a presentation I gave last night, and the recipient was really pleased with it.  I have read it myself and found it really interesting (especially the bit on the differences, or lack of them, between men and women's top strengths) so I have no hesitation in recommending it (and using my affiliate link).  Something for your suitcase this summer, perhaps?

It wasn’t that long ago that I gave a webinar on managing money on projects, but it is taking a long time to answer all the questions that I didn’t get round to doing during the live session.  Thanks to all the fabulous participants, who asked such brilliant questions!  I am still trawling through them hoping to answer them all, and here is today’s batch of managing money Q&A.  They are all about timesheets and time tracking today.

If not via timesheets, how do you gather information on time spent on individual work packages?

I think timesheets are the only viable option to gather information on time spent on individual work packages.  The alternative is not recording time at all.  This is possible with fixed date projects where you have high commitment to work towards fixed milestones, but it doesn’t give you any data to use for forecasting in the future.

Without timesheets, how can you develop historic figures for future planning?

As I said above, you can’t.  Guessing might work, but I don’t recommend it!

I found that subject matter experts are more willing to devote time on projects if they can charge time to it.

I expect this is true in companies where charging is part of the culture and reward structure.  Other companies reward people on their contributions, team work, collaboration and so on, where being able to cross-charge for time spent is not as important.  It can even vary by departments within an organization.  I think the best thing to do is find out what works within your organization and do what you need to do in order to get the commitment required from the relevant people.

If you don't use timesheets how do you track actual hours against budgets?

You can’t.  But if you aren’t charging for your resources, you don’t always need to.  Salaried staff, seconded to a project for a fixed duration can work 3 hours a day or 13 hours a day and they cost the same.  A project resource who charges your hourly for his or her time could spend an hour being not very productive, or an hour being productive, and they cost the same.  Good management practices will mean you can monitor their workload and get the best out of both salaried and chargeable resources.  Whether or not this is important to you depends on whether you need to cross-charge other departments for effort spent, or whether they will be charging you.

Are timesheets used for other resources (non-PM resources)?  How do you capture PM time?

If you need to know how many hours someone is working on your project, or on individual tasks, then you need them to do timesheets.  So ask them to!  You can capture project management time in exactly the same way as you capture any other time.  Here are some sample timesheet entries for project management activity:

• Planning
• Risk, Issue, Changes and Dependency Management
• Project meetings (e.g. steering group, Project Board, team meetings, producing minutes)
• Team management (1:1s with project team members etc)
• Financial management (ordering, budgeting, forecasting)

You could have a big bucket task called ‘project management’ but I expect you would get more use out of the data if you broke it down further.

How do you convince everyone on the team to record their time accurately?  Especially when working multiple projects?  If they document them throughout the day, it’s easy, but is it practical?

This is the perennial problem with time recording.  I think the best approach is to make it as easy as possible for the people who have to record their time.  I saw a little desktop widget recently that times you and updates your timesheets automatically.  You just have to click when you start a task and click when you are done.  You can’t make it easier than that!  

You also have to fight against the urge for people to put in more hours than they have actually worked in order to ‘look good’.  Presenteeism is a problem in many offices, and this should be discouraged.  How about sharing your personal timesheets with the team so they can see you setting a good example of how it should be done?  What tips do other people have for getting time recorded accurately?


You can see the whole presentation online here, via a recording of the webinar.  Read the previous instalment of Q&A here.  I’ll have some more Q&A for you soon!